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Pitching for high level of probity, Finance Minister P Chidambaram today said Indian capital markets are facing many concerns including low level of retail participation, which needed to be addressed urgently.

"It is important that all our institutions maintain the highest ethics and highest standards of probity. An ethics deficit can bring down the entire financial system as we have seen in the past.

"Some recent incidents have alerted us and we must never never take such chances again. We must demand the highest standards of probity from the owners and managers of financial markets infrastructure institutions," he said at the 20th anniversary of National Stock Exchange (NSE) here.

The statements comes in the backdrop of Rs 5,600 crore payment crisis at National Spot Exchange Ltd (NSEL).

Chidambaram further said rising volumes of rupee trade in NDF (Non-Deliverable Forward) market abroad is a major concern.

NDF is a forex derivative instrument, traded over the counter and operated in currencies that are freely convertible unlike the rupee. The rising volumes of rupee trade in the NDF abroad could adversely affect value of the domestic currency. Listing out other concerns like low retail participation, lack of financial literacy and financial inclusion, Chidambaram said such issues need to be addressed urgently.

Improvement of financial sector competitiveness and optimal use of exchange infrastructure for investment classes are other areas which need urgent attention, he added.

Referring to the recommendations of the Financial Sector Legislative Reforms Council (FSLRC), Chidambaram said as passing legislation on the suggestions will take time, it has been decided to implement the non-legislative ones first.

On the ordinance giving more powers to SEBI, Chidambaram said if the Standing Committee does not submit its report by end of the current session, the government will have to promulgate the ordinance for the third time.

The Winter Session is scheduled to conclude on December 20.

Through the ordinance, powers were given to SEBI at a time when some investors were being defrauded in the name of chit funds and various other fraudulent schemes.

Stressing on innovations, Chidambaram said the recent events have highlighted the criticality of financial market, infrastructure institutions including exchanges, clearing houses, depositories and payment infrastructure.

"These must be seen as extended part of regulatory apparatus because they play legislative function as they are authorised to write the by-laws.

"...They also performed an executive function such as enforcing the by-laws and also detecting the violation of regulations and laws," he said.

Earlier speaking at the event, SEBI Chairman U K Sinha said insider trading issues and corporate governance are major focus areas before the market regulator.

NSE MD and CEO Chitra Ramkrishna said time has come for India to target and achieve the lofty goal of being among the top markets globally.